Cost of a Data Breach Rose to $3.5M in 2013

According to the Ponemon Institute's ninth annual Cost of Data Breach Study, the consolidated total cost of a data breach increased 15% in the last year, to $3.5 million. But some experts say those figures likely underestimate the full scope of the damage.

The study also found that the cost incurred for each lost or stolen record containing sensitive and confidential information increased more than nine percent to a consolidated average of $145.

The research involved the collection of detailed information about the financial consequences of a data breach. For purposes of this research, a data breach occurs when sensitive, protected or confidential data is lost or stolen and put at risk. Ponemon Institute conducted 1,690 interviews with IT, compliance and information security practitioners representing 314 organizations in the following 10 countries: United States, United Kingdom, Germany, Australia, France, Brazil, Japan, Italy, India and, for the first time, the Arabian region (a consolidation of organizations in the United Arab Emirates and Saudi Arabia).

"The goal of this research is to not just help companies understand the types of data breaches that could impact their business, but also the potential costs and how best to allocate resources to the prevention, detection and resolution of such an incident," said Dr. Larry Ponemon, Chairman and Founder of Ponemon Institute. This year's Cost of Data Breach Study also provides guidance on the likelihood an organization will have a data breach.

The following are key takeaways:

The most costly breaches occurred in the U.S. and Germany at $201 and $195 per compromised record, respectively. The least expensive data breaches were in India and Brazil at $51 and $70, respectively.

Root causes of data breaches differ among countries. Countries in the Arabian region and Germany had more data breaches caused by malicious or criminal attacks. India had the most data breaches caused by a system glitch or business process failure. Human error was most often the cause in the UK and Brazil.

The most costly data breaches were those caused by malicious and criminal attacks. The U.S. and Germany paid the most at $246 and $215 per compromised record, respectively. These types of data breaches were least costly for companies in India and Brazil at $60 and $77 per compromised record, respectively.

A strong security posture was critical to decreasing the cost of data breach. On average, companies that self-reported they had a strong security posture were able to reduce the cost by as much as $14 per record.

The involvement of business continuity management reduced the cost of data breach by an average of almost $9 per record.

The appointment of a Chief Information Security Officer (CISO) to lead the data breach incident response team reduced the cost of a breach by more than $6.

"Clearly, malicious insiders and criminal attacks are a growing concern for businesses, especially when we consider how persistent data has become in the age of cloud and mobility," said Kris Lovejoy, General Manager, IBM Security Services Division. "A data breach can result in enormous damage to a business that goes way beyond the financials. At stake is customer loyalty and brand reputation."

Consistent with previous Cost of Data Breach studies, most often the common cause of a data breach is a malicious insider or criminal attack. We asked companies what worries them most about security incidents. Following are some of the key findings:

The greatest threats to the companies in this study are malicious code and sustained probes. According to threats increased.

Only 38 percent of companies have a security strategy to protect its IT infrastructure. A higher percentage (45 percent) has a strategy to protect their information assets.

Malicious code and sustained probes have increased the most. Companies estimate that they will be dealing with an average of 17 malicious codes each month and 12 sustained probes each month. Unauthorized access incidents have mainly stayed the same and companies estimate they will be dealing with an average of 10 such incidents each month.

Products

Effective Security Management, 5e, teaches practicing security professionals how to build their careers by mastering the fundamentals of good management. Charles Sennewald brings a time-tested blend of common sense, wisdom, and humor to this bestselling introduction to workplace dynamics.

Not all employees are saboteurs or malicious actors, but without education, unwitting employees could cause just as much damage as a targeted data theft in the long run. Read how to prevent this in the August 2015 issue of Security. Also read how building stronger relationships with local and national law enforcement can aid in school security awareness and response, learn about the dangers of continuing to use old credit card terminals, and see the ASIS International 2015 product review.